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EU keeps cool in fresh Russian-Ukrainian gas dispute

Ukraine and Russia are embroiled in a new gas dispute after Moscow sent Kyiv a huge bill for gas it commissioned under long-term contracts but did not use. Asked by EurActiv if there was a risk of a repeat of the 2009 gas crisis, the European Commission said it expected both sides to make sure that shipments to the EU remain uninterrupted.

News media reported over the weekend that Gazprom sent Ukraine's Naftogas a €5.2-billion bill under a 'take-or-pay’ clause that Ukraine has to disburse even if it hasn’t imported the gas.

According to the KyivPost, in 2012 Ukraine bought 32.9 billion cubic metres (bcm) of Russian gas, while according to the take-or- pay clause it should have imported a minimum of 42 bcm. The long-term contract was agreed in 2009 under former Prime Minister Yulia Tymoshenko, who is serving a 7-year prison sentence for abuse of power over the signing of this agreement.

The Russian move is largely seen as retaliation for the announcement by Ukraine of a looming deal with Royal Dutch Shell to develop shale gas in the eastern Donetsk region.

The EU executive is monitoring the looming dispute.

“We do expect both parties, Russia and Ukraine, to ensure that there are no gas interruptions and gas supplies to flow normally as usual,” said Marlene Holzner, spokesperson for Energy Commissioner Günther Oettinger.

Asked about the Commission’s opinion on the take-or-pay clause, Holzner said the EU executive was not against long-term agreements as such but that countries should not solely rely on them.

“It is on many occasions better for a country to buy cheaper gas on the wholesale, than having long-term agreements," Holzner said. She added that the EU executive was not against long-term agreements, but it also wanted clients to have the opportunity, if there were cheaper opportunities, to buy their gas there,” Holzner said.

Asked what the EU could do to avert a repeat of the 2009 gas crisis (see background), Holzner insisted that the present situation was different.

No crisis

“What we have seen is two separate issues happening. We have reports that Ukraine has given Shell a business to exploit shale gas, and a couple of days afterwards Russia has said to Ukraine ‘We would like you to pay your bill’. Nobody is talking about a crisis,” she said.

Holzner said the Commission was in contact with Russian and Ukrainian officials on a very broad range of issues and that Oettinger was due to meet Ukrainian Foreign Minister Leonid Kozhara to prepare the EU-Ukraine Summit on 25 February. Gas issues were likely to be discussed on this occasion, she said.

Holzner also stressed that the EU was better equipped to deal with an interruption of gas supplies today than it was in 2009.

According to the Financial Times, the Gazprom bill puts strains on Ukraine’s finances at a time when the country is scrambling to cover the equivalent of €7.4 billion in external debt maturing this year. The Wall Street Journal reported that the large bill comes just before Kyiv starts talks with the International Monetary Fund on a potential $15-billion (€11.2-billion) loan amid an economic slowdown.

Background

A payment dispute between Russia and Ukraine over gas supply and transit left millions of East Europeans without heating in the first three weeks of 2009.

A solution to the gas crisis was later found between Russian Prime Minister Vladimir Putin and his Ukrainian counterpart at that time, Yulia Tymoshenko.

Under the present Ukrainian leadership, Tymoshenko was sentenced to seven years in prison over allegations that she abused her office in relation to a gas deal signed with Russia in 2009. This development has been a setback for the EU-Ukrainian relations.